George Soros in China’s Crosshairs After Predicting Tough Economic Times Ahead

George Soros, billionaire and founder of Soros Fund Management LLC, during an interview at the World Economic Forum (WEF) in Davos on Thursday, Jan. 21, 2016.

Bloomberg News

China is putting a face on the economic pessimism it accuses of helping weaken the yuan and the economy: billionaire investor George Soros.

A front-page commentary published in some editions of People’s Daily on Tuesday appeared to warn Mr. Soros would lose any bets he made based on a recent prediction that hard economic times for China are “unavoidable.”

Other state media followed suit. Denouncing “radical speculators,” China’s official Xinhua News Agency dismissed the famed currency trader’s view as “the same prediction several times.” The Global Times, in its English edition, asked, “So why are so many Western pundits and media outlets so intent on talking China down?”

The rhetorical shots come as China is making broader efforts with market interventions and rule adjustments to offset the impact of its slowest growth rate in a quarter century, shore up grinding stock markets and stem surging capital outflows. China’s state-run media regularly note concerns the economy is cooling, but they tend to highlight positive aspects of what the government describes as a broad economic restructuring.

The uniformity and prominent placement in government-run media of the challenges to foreign critics, including economists quoted by Western newspapers, appear to suggest growing concern in Beijing that negative sentiment is spreading.

State media warnings directed at private individuals like Mr. Soros are rare. But his legend as an investor stems from a career making profitable currency bets – both real and rumored – that are widely studied in China. It comes just as China’s central bank is taking steps to limit flight from the Chinese yuan by its huge middle class.

Suspicion in China that Mr. Soros is now placing bets against the yuan follow comments he made last week at the World Economic Forum in Switzerland. “A hard-landing is practically unavoidable,” Mr. Soros told Bloomberg Television. “I’m not expecting it, I’m observing it.”

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“Declaring war on China’s currency? Ha,” said the People’s Daily commentary, which appeared in the overseas edition, a newspaper aimed at Chinese living outside China. The paper serves as the official purveyor of Communist Party views, and the commentary was authored by a researcher at China’s Commerce Ministry. It wasn’t published in the domestic editions, though it did appear online.

Similar words appeared in other key state media. Multiple news items published by Xinhua raised concerns Mr. Soros would back up his view with powerful bets of a plunge in the yuan or the Hong Kong dollar. “If Soros really does that this time, he will definitely lose money,” economist Li Daokui told Xinhua. “I am worried for him as a friend.”

On social media, many commentators doubted even a rich investor like Mr. Soros could alter Chinese fundamentals, with one saying he “might be able to bully a small country.” Others injected humor, including a widely circulated joke that cast doubt China has the firepower to fight a savvy billionaire following bloody losses in its stock market.

Blaming international currency speculators isn’t a surprise, according to another well-known investor, Jim Rogers, who says they “always” get faulted for market turmoil no matter where, despite evidence that domestic investors are typically a more powerful force. “Everybody looks for a scapegoat,” he said by telephone from Singapore.

Still, Mr. Rogers, a one-time partner of Mr. Soros, says his concern is that China’s slowdown is getting unfair blame for global difficulties, which he says stem from indebted governments in the U.S., Europe and Japan. “I see serious economic problems in the world, worse than we saw in 2008,” said Mr. Rogers, noting that he remains an investor in China’s yuan and listed stocks. “It’s clear these problems didn’t start in China.”

Almost three years ago, Mr. Soros had predicted China was headed for economic hard times – and much of the view was reported by the country’s state media at the time.

Speaking in April 2013 at the Boao Forum, an event the Chinese government styles as its version of Davos, Mr. Soros said the country’s banking system was troubled, its transition to the consumer-led economy wouldn’t be easy and that slower growth could sap confidence, all of which could “precipitate a hard landing.” Mr. Soros added, “The current growth model can continue for another year or two, but not for a decade.”

–James T. Areddy, with contributions by Yang Jie. Follow James on Twitter @jamestareddy.

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